An exclusive club charges a lot for membership, which makes it so only elite people can join. Elite people are willing to pay the outrageous membership fee because the club is so exclusive and they will get to hang out with other elites. So the club can charge a lot for membership, etc. etc.
An elite university has very difficult admissions requirements. So only the best students get admitted. They are eager to go since the university is so elite. The fact that the university has lots of great students sustains its prestige reputation. Which means that it is very difficult to get admitted, so only the top students get in. etc. etc.
Does it need a specific term? It sounds like precisely the expected market response. Humans don’t tend to have very many names for things happening precisely according to expectations.
Sounds like supply and demand. There is an (admittedly artificial)short supply and a high demand therefore the price will rise to whatever the market will bear, and in the situations you describe it will bear a very high price.
It sounds like the OP is describing a situation in which cause and effect are reversed from what you’re talking about here: not that price is high because demand is high, but that demand is high because price is high (and therefore restricts participation to those who are willing and able to pay that price).
Another example, IIUC, would be choosing to live in an area where the rent or housing price is high, not because it’s any nicer or more luxurious or more convenient, but because that way you’re guaranteed to have a “higher class” of neighbors.
Actually, education at an expensive school would probably be a Veblen Service. Probably club membership too. (It isn’t a physical item, and most of what you’re paying for are related to what the staff inside do.)
It doesnt have to be due to artificially short supply. Think of jewelry, (especially diamonds), or fancy perfume.
People want the price to be jacked up high, so they can feel elitist and special.
Although snob appeal is not necessarily the only reason a consumer might prefer a higher price.
Imagine two identical amusement parks, except that one charges a significantly higher admission price than the other. I might choose to go to the more expensive park under the assumption that it will be less crowded and I’ll spend less time waiting in line and more time actually doing stuff.
The OP’s university with high admission standards is another example, assuming you take “higher price” to mean higher admission standards rather than just monetary price: there is value (beyond mere snob appeal) to attending a college or university where your fellow students are all of relatively high caliber.
I think that’s a good distinction you draw. But there’s another element in the phenomenon I described, which is its self-perpetuating aspect. For example, you could easily start a social club that charges ridiculous fees, but chances are it won’t get off the ground. It’s kind of like the “network effect,” but with an elitist twist.
I call it Groucho Marxism. Groucho is supposed to have once refused to join a club that he was asked to join. He said, “I would never join a club that would have me for a member.” The phenomenon described would cause a lot of people to be frustrated, since the only club that they would want to join would be the one that they can’t afford.
IANE, but it could also be explained by signalling. Basically, the idea is that you look for signals to uncover hidden information. So, for example, let’s say I want to start a club, but I only want rich people to come in. I can’t demand to see a bank statement at the door from everyone, so I have to look for behavior that might be correlated to rich people. If I charge a high cover price and only let people in who wear expensive clothes, then I have a greater likelihood that only rich people coming in.
The same thing could be applied to universities. It’s not easy to actually determine the quality of the education, so you look to other factors such as price, the quality of the student body, the resumes of the teachers, etc that work to signal the quality of the education.
Apparently, signalling theories are difficult to prove empirically and haven’t been studied very well, so take this all with your appropriate grain of salt.
Then there are van Westendorp Optimum Price Points, which may (or may not) be what the OP is thinking of. Here’s an explanation from a paper I worked on recently:
I’m not our (most welcome Guest) OP Aguirre, but I assumed that it was a reference to one of these options, or (even better IMHO, but surprisingly absent from that list) to a “sort of green pig” that is notable for its propensity to outgrabe.
Just a thought that struck me. Don’t most clubs practice this exclusivity in some manner?
The Cosmos Club in Washington DC takes a different angle on this phenomenon.
Their membership requirements are not based on monetary levels and in fact you can not buy your way into the club.
Instead the requirements are that you have to have made a significant contribution to society in some manner.
By creating these rules you essentially create a grouping of people who are like minded. The same could be said for a club with exceedingly high membership fees. The individuals who do join are very likely to be of similar socioeconomic backgrounds and therefore more likely to be compatible when interacting with each other. The main reason I can think of for joining any club.
I would think this thought pattern could be extended to most clubs. Im thinking specific religious clubs or even clubs pertaining to a specific interest like a sport or musical preference.
